SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 3, 2003

                                   DYNEGY INC.
             (Exact Name of Registrant as Specified in its Charter)

     Illinois                          1-15659                     74-2928353
(State or Other Jurisdiction    (Commission File Number)         (IRS Employer
of Incorporation)                                            Identification No.)

                           1000 Louisiana, Suite 5800
                              Houston, Texas 77002
                    (Address of Principal Executive Offices)

       Registrant's telephone number, including area code: (713) 507-6400

                                 Not Applicable
          (Former Name or Former Address, If Changed Since Last Report)







ITEM 5. OTHER EVENTS

     On July 3, 2003,  Dynegy Inc.  announced that it reached a settlement  with
the Kroger  Company  related  to four power  supply  contracts.  The  settlement
agreement,  which must be approved by the Federal Energy Regulatory  Commission,
provides  that Kroger will pay Dynegy $110 million to terminate  two of the four
power  contracts and to  restructure  the remaining two contracts  through which
Dynegy   indirectly   provides   electricity  to  Kroger  subsidiary  stores  in
California.  The parties have also agreed to resolve an outstanding FERC dispute
related to contract pricing. Dynegy expects to record a pre-tax, non-cash charge
of  approximately  $30 million in its customer  risk  management  segment in the
second  quarter 2003 in connection  with the  settlement.  The $110 million cash
settlement is expected  during the third quarter and  represents an  accelerated
payment  under the  terminated  and  restructured  contracts.  The press release
announcing  the  Kroger  settlement  is  attached  hereto  as  Exhibit  99.1 and
incorporated herein by this reference.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

a) Financial Statements of Business Acquired - Not Applicable.

b) Pro Forma Financial Information - Not Applicable.

c) Exhibits:

   99.1     Press Release of Dynegy Inc. dated July 3, 2003.







                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                                   DYNEGY INC.


                                                   BY:  /s/_J._Kevin_Blodgett___
                                                         J. Kevin Blodgett
                                                         Corporate Secretary


Dated: July 7, 2003